Business Chapter 16

One of the first things you should do as part of the financial planning process is to a. create a balance sheet and cash flow statement b. develop financial goals c. begin searching for a better paying job d. purchase life insurance

A

Your birth certificate and social security card would likely be contained in which category of your financial records filing system? a. personal records b. housing records c. tax records d. money management records

A

Your net worth is a. the difference between your personal assets and your liabilities b. the total amount of all of your investments c. what you have left over in your paycheck each week after deductions are taken out d. the total value of your personal assets

A

A successful budget a. should never show any variances b. should be flexible c. should not need to be re-evaluated once it is in place d. should reflect current and future income.

B

This part of Social Security provides death benefits to dependents of workers who die. a. unemployment insurance b. survivors insurance c. retirement insurance d. disability insurance

B

Which of the following is a variable expense? a. insurance premium b. groceries c. rent d. mortgage payment

B

Which of the following would probably be a short-term financial goal? a. going to college. b. purchasing a new CD c. buying a luxury automobile d. going on a three week cruise

B

If actual spending is greater than planned spending, it is referred to as a a. surplus b. surfeit c. deficit d. liability

C

If you have a budget, you should a. be able to buy anything you want. b. never buy anything on credit c. learn how to plan for financial emergencies d. all of the above

C

Take-home pay is: a. cash inflows minus cash outflows b. the amount you will receive when you cash your paycheck c. the amount of a paycheck before taxes and payoll deductions d. the money you have available to spend as a result of working plus any other income such as a gift or stock dividend

C

This is a tax-sheltered retirement plan in which people can annually invest earnings up to a certain amount; the funds are taxed when they are withdrawn after age 59 1/2. a. Social Security b. pension c. individual retirement account d. annuity

C

This month, Anthony's take-home pay was $1,500. He also earned $20 interest on a savings account. He spent $250 for rent, $100 for groceries, and $300 for other expenses. Anthony's net cash flow this month totaled a. $1,500 b. $1,520 c. $870 d. $850

C

This month, Anthony's take-home pay was $1,500. He also earned $20 interest on a savings account. He spent $250 for rent, $100 for groceries, and $300 for other expenses. Anthony's total cash inflow this month totaled a. $850 b. $1,500 c. $1,520 d. $870

C

Which of the following would be a personal asset? a. your college loan b. your car payment c. your personal computer d. your mortgage

C

Your personal financial filing system would include all of the following EXCEPT a. pay stubs and W-2 forms b. a copy of your will. c. vacation photos. d. contracts.

C

Money management involves a. find a way to satisfy all your wants and needs. b. rarely spending money c. living well below your means d. getting the most for your money

D

The amount budgeted for savings and other expenditures is called a(n) a. expense b. outflow c. target d. allowance

D

When you make a loan payment, your a. net income increases b. net worth is unaffected. c. cash outflows decrease d. liabilities decrease

D

Which of the following correctly shows the budgeting process? a. plan budget categories, set financial goals, maintain financial records, evaluate your budget b. set financial goals, maintain financial records, plan budget categories, evaluate your budget c. maintain financial records, plan budget categories, evaluate your budget, set financial goals d. set financial goals, plan budget categories, maintain financial records, evaluate your budget

D

Which of the following would NOT be included in the Household category of a budget? a. utilities b. rent c. furniture d. groceries

D

____________________ planning involves the accumulation and management of property during one's lifetime and distribution of one's property at death. allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

Estate

A cash flow statement examines the changes in the value of your personal assets. (T/F)

F

A checkbook is an efficient budgeting system. (T/F)

F

All people have basically the same financial planning goals, regardless of which stage of life they are in. (T/F)

F

An amount of money an insurance company pays to a person who previously deposited money with the company is called a pension (T/F)

F

Most financial advisers recommend than an amount be set aside for food and housing as the first part of a budget. (T/F)

F

Putting together a good budget is a very time-consuming process (T/F)

F

A balance sheet reports, assets, liabilities, and net worth on a given date (T/F)

T

A cash flow statement can help you develop and determine budget categories (T/F)

T

Financial planning generally reduces an individual's financial uncertainties. (T/F)

T

The current value of all assets of an individual or family is the first thing stated on a balance sheet (T/F)

T

A(n) ___________________ is the amount of money you plan to use for a certain budget category. allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

allowance

Most people's lives follow a predictable pattern called a life ____________________ allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

cycle

Net worth is sometimes referred to as owner's ___________________. allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

equity

Costs that occur on a regular basis are called ___________________ expenses. allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

fixed

A cash _____________ statement reports net wages and other income along with spending for a period such as a month. allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

flow

A financial _______________ includes a careful review of your finances and usually includes the creation of a personal balance sheet and cash flow statement. allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

inventory

Amounts owed to others are called debts or ____________________ allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

liabilities

Amounts spent on food, clothing, transportation and other living costs are called cash _______________________. allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

outflows

A(n) ____________________ is a series of regular payments made to a retired worker under an organized plan. allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

pension

A financial ______________ is a report that summarizes your current financial condition and helps set a direction for your future financial activities. allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

plan

A balance ____________ is a record of assets and liabilities at a point in time. allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

sheet

When a family spends less than they have budgeted for a month, a(n) _____________________ occurs.

surplus

Any difference between actual spending and budgeted amounts is called a budget ____________________. allowance estate flow outflows surplus bar equity inventory pension sheet cycle fixed liabilities plan variance

variance